Michigan needs to move quickly to reduce the regulatory
burden on businesses in order to improve the state’s economy. One means of doing this is to eliminate the excessive use of "guidance directives" by regulatory agencies.

Guidance directives are declarations of policy issued by
state agencies that circumvent the formal rulemaking process. Although guidance
directives are not legally binding, they are commonly used to force the
regulated community to conform to the political will of agency personnel.

This tactic is commonly employed in particular by the
Michigan Department of Environmental Quality. It is not uncommon for staff-level employees of MDEQ to issue directives with minimal oversight by supervisors. These directives often impose significant costs on both businesses and individuals with virtually no input from the Legislature or the regulated
parties.

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As director of MDEQ in the mid-1990s, I witnessed such
regulatory abuse. In one instance, an agency employee was preparing to issue a
guidance directive that would have classified silica (a natural component of
sand) as toxic. Such an action would have effectively reclassified all Michigan
beaches as contaminated areas. When this came to my attention, I intervened and
prevented implementation of the directive.

Originally, guidance directives were intended only to
clarify regulatory policy for agency staff. However, a recent review of the MDEQ Web site revealed more than 90 pages of guidance on just one type of
environmental assessment.

Many businesses are reluctant to challenge guidance
directives for fear of retribution by agency staff who oversee their operations. Fighting an agency over guidance directives could result in permit delays, while the costs of litigation are a drain on the bottom line.

On the other hand, complying with a guidance directive can
be costly. The Michigan Administrative Procedures Act spells out the formal
process by which agencies are to promulgate legally binding rules. While the act
is not without its problems, it does provide opportunities for public input
through hearings, comment periods and legislative review. Guidance directives
sidestep the administrative process entirely.

Efforts are underway at the federal level to address the
problem of guidance masquerading as regulation. The U.S. Office of Management
and Budget, for example, issued a bulletin that limits the use of guidance in
lieu of rulemaking by federal agencies. Some of the major OMB strictures imposed
on federal agencies include the following:

Significant guidance documents (that have an effect on the economy of $100 million or more) must be approved by senior agency officials.

Guidance documents shall not include mandatory language such as "shall," "must," "required" or "requirement" unless these words are describing a statutory or regulatory requirement.

Agencies are required to make guidance documents available to the public in electronic form.

A public comment process for significant guidance documents is required.

Although these reforms are a step in the right direction, they still provide too much discretion to agencies.

At the state level, the Michigan Legislature should act
quickly to prohibit state agencies from issuing guidance directives that have
the practical effect of regulations. Lawmakers should also declare existing
guidance documents to be null and void within 18 months of issuance — the time
it typically takes to formally promulgate a rule.

Eliminating "government by guidance" would send a positive
signal to job providers. There’s no excuse for continuing this regulatory burden on Michigan businesses when even the massive federal bureaucracy has gotten the message.

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Russ Harding, a former director
of the Michigan Department of Environmental Quality, is senior environmental
policy analyst with the Mackinac Center for Public Policy, a research and
educational institute headquartered in Midland, Mich. Permission to reprint in
whole or in part is hereby granted, provided that the author and the Center are
properly cited.